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HomeMy WebLinkAbout12/14/83 MINUTES RA MINUTES BAKERSFIELD REDEVELOPMENT AGENCY Regular Meeting-December 14, 1983 The Regular Meeting of the Bakersfield Redev:el~r~ w~- called to order by Chairman Barton on Wednesday~ ~e ~i.' !, ~ ]5 3 at 5:00 p.m. in the City Hall Council Chambers. The Secretary called the roll as follows: ME[~BERS PRESENT: James Barton James Childs Chris Christensen Rollie Moore Thomas Payne Art Rockoff MEMBERS ABSENT: Donald Ratty MINUTES [linutes of the Regular Meeting of November 23, 1983 were approved as presented. SCHEDULED PUBLIC STATEMENTS Hr. Gordon Gill, of Millard Archuleta, Eddy, Paynter Associates, representing lioreland Development Co., was present and gave the status on the progress being made on the Truxtun Ga!leria ?rojeck. He seated tha'k in June discussions were held with the Counay regardSng dhe development of the Galleria and ti~e possib41ity of the County leasing space in the project. ~hese discussions continued until ~[ovember 22 at which time the County indicated they we?e willing ho enAer into negotiations on an agreement with the Galleria for leasing two floors with an option of first right of refusal on four addit4onal floors on the first tower. Mr. Gill indicated the developer has agreements or letters of intent to lease approximately 70 percent of the first tower which is proposed for the corner of Truxtun and Chester Avenues. The developer also has letters of intent for 50 per- cent of the commercial area. There have been serious discussions with a major tenant who would take over 42 percent of the second tower. The County Board of Supervisors will have a report before them on January 3, regarding the leasing of the two floors. Sometime in January, the Beard will review a proposal with regard to the purchase of the Hall of Records. There are two major issues ~hat were to be acted upon w4thin the present 90-day period. Those provisions concern the disposition of the good faith deposit, relative to the evidence of financing, and an agreement w4. th California Repuh]4c Bank with regard to the acquis]tion of their property. Because of the inaction of the County, the develo]~er has been unable to proceed in order to meet the deadl~.nes outlined in the DDA. Mr. Gill requested that the Agency give consideration to exhending those deadlines. He explained that there is a problem with the tax-exempt bonding proposed for financing a portion of the project. The Federal Government had a bill proposed this year which they did not take action on, however~ that bill has certain provisions that im~le~enZ new rules and regulations w[~h re~ard to the use of tax-exempt bonds until the Federal Government passes the bill. Hr. Gill subraitted a letter to the Agency addressed to Terry Mor:~land from Thomas Hard't, Assistant Vice Presfident of Bank of America dated December 24, 1983 regarding the Galleria project in which 'the developer is attempting to acquire financing for this project. He explained the problems the developer has had with meeting the deadlines. He stated that it is out of his hands~ and requested extending izhe time elements with regard to the good faith deposit and also with regard to Attachment 3, Section 9 of the Schedule of Performance. -1- Agency Member Christensen commen%ed that it seems that every- thing is contingent upon the success of the second tower. Mr. Gill responded that the financing institutions have put certain requirements on the developer with regard to preleasing the first tower. If he is able to prelease the required spaces in the second tower, the whole Galleria project will be built at one time. If they are unable to proceed because of the leasing of space, then the second phase may be delayed. He stated that with the way the negotiations are going with the major client for the second tower, it is possible the Galleria will go as a single phase project. Agency ~ember Christensen questioned if there wes any factual evidence that Congress will adopt the bill. Mr. Gill stated that their resources in Washington indicated to them that some definite action will be taken, and that there is tremendous pressure throughout the nation to 'take some type of action. Agency Member Payne stated that he understood that the project is contingent upon what the Agency does at this meeting, and is subject to the purchase of the Hall of Records, and the bond financing, and to a construction loan and take-out financing, which are subject to certain percentage preleasing requirements. He stated that the financial consultants indicated the City is in the best position. He raised a question concerning the provision in the DDA to forfeit $25,000 in the event of a default. He also questioned if Dhase one is contingent upon a percentage commitment on phase two. Mr. Gill explained 'that ohase one will be built without any com- mitment on the second phase. He also stated that 125 days would be appropriate. His response to the $25,000 is that the developer had no control over the legislation or the County's inability to make a decision. Mr. Kennon stated that, as a result of discussions with consul- tants and staff to determine how long it would take Congress to make a decision and to prepare a bond issue, it was staff's feeling that 125 days would be an appropriate length of time. Agency Member Payne stated that he only wanted to allow the number of days that staff can justify for the project. He questioned if the letter from the Bank of America would make it a joint venture with Bell Savings which would make it an entirely different financing package. ~r. Gill clarified that Bell Savings is not involved in dis- cussions at this time. Agency ~iember Moore stated that public support for this project has waned, and that proponents and supporters are having serious thoughts about the project and that the Galleria is being perceived by many as a City project. He stated that it upset some people that the Coun~cy will become the primary tenant, and that the government occupying space in the Galleria is not the answer to encourage the private sector to come downtown. He questioned Mr. Gill if the de- veloper is asking that the $25,000 be omitted. l,ir. Gill responded that they were not asking that the $25,000 be omitted. Agency Member Moore offered for consideration that maybe the time to perform has come and that the Agency should proceed on with the DDA as already jointly agreed. hr. Kennon explained 'that the developer has a 90-day period in which to complete his financing, and then he moves into the second 90-day period and places a portion of his $oo~ faith deposit at risk. If he moves into the third phase, he would forfeit $50,000, -2- and by the 4th 90-day period, he would lose his entire deposit if he were unable to perform. Mr. Terry Moreland was present and explained that the Agency shares the same concerns as the developer. He stated that he cannot bring back a commitment letter until there is an indication of the availability of the Hall of Records. The County will be making a decision on the Hall of Records one week prior to starting the 90-day period. He stated that if he goes to the lending institution and presents the project and the limitations that the DDA outlines and the restrictions, the bank would think the developer is at the mercy of the Agency. He further stated that he cannot bargain on a commit- ment letter that would satisfy the Agency because the Agency cannot give the bank a commitment of how the bonds will be handled. Agency Member Childs questioned if the bond issue would have been passed, and if the bonds would have been sold, would that have completed the 100 percent financing obligation. Mr. Moreland responded that as far as the developer's part of it is concerned, that is correct. He clarified that the $25,000 would not be applicable in this case because of the situation the developer is in. He stated if the County would sell the Hall of Records and the City went ahead with their bond financing, then the 90 days should be reasonable. Agency Member Childs stated that the Agreement specifically states Lhat if certain conditions were not met at a certain time, the $25,000 would be ~mplemented. Mr. Kennon stated that the DDA has two requirements, first the developer has to submit his proof of financing for construction, and an agreement between California Republic Bank and the developer that will allow the developer to utilize certain spaces within the project site that is owned by California Republic Bank for develop- ment. There is nothing specifically within the DDA that delineates the tasks that must be completed to receive the proof of financing, however, the lender would not be interested in the project unless the developer has some control of the site. All the Agency requiras of the developer is to submit proof that he can finance the construc- tion, and he has 90 days to do that. At the end of that 90-day period, he can enter into another 90-day period, but if he doesn'i2 provide proof of financing within 120 days, he loses the $25,000. Agency ~ember Rockoff questioned if the letters of intent for approximately 70 percent of the first tower includes the two floors of ihe Couniy's six floors, or nothing of the County. Mr. Moreland responded that the figure includes two floors of County. Agency Member Christensen stated that the City shouldn't go into building businesses for other County agency buildings, and 'that the County has a much bigger tax base than the City. He said he was reluctant to give an extension, and if he does, it will not be contingent, it will be a term. Agency ~iember Childs questioned what would happen if the County did not sell the Hall of Records. Mr. Kennon stated that the developer would have to redesign the project or terminate it. Agency Member Payne questioned if the Agency could allow a 90-day extension at the end of this 90-day period rather than the 120 days. City Attorney Oberholzer explained that within the DDA there would be a 90-day rollover, at the end of 90 days there would be another 90 days in whJch Mr. Moreland can obtain his financing unless the Agency would :~ake some kind of action to declare him in default with regard ot that 90 days. However, with that rollover, Mr. Moreland puts up $25,000 lia.~lity in the event he doesn't perform, buL if the bonding legislation comes out such that we cannot issue bonds, hhen -3- Mr. Moreland would not be jeopardized, and the $25,000 wouldn't go because the City would be unable to perform. Mr. Moreland stated that there will never be another extension requested on the part of the developer. He stated they will either terminate the project, or they will go forward and suffer the con- sequences. Agency Member Christensen stated that he would be willing to extend for only one time. He questioned why, if this is such a good development project, doesn't the investors and developers move in on this project. Mr. Kennon responded that as a result of the publicity on this project, he has been approached by developers interested in doing this kind of project. He stated that by having a successful project of this 'type, the City will get the attention of the development community. Agency Member Payne made a motion to grant the 125-day extension to the developer for the Truxtun Galleria project. City Attorney Oberholzer questioned if the Agency wanted the extension granted on the grounds that any future extensions would have to be negotiated. Agency Member Rockoff questioned if there was any kind of extension sought~ does the Agency have an opportunity to accept it or go on automatically as long ss the penalty is put out. City Attorney Oberholzer stated that at the end of the first 90 days the Agency finds 'that it does not want the rollover it can notice him that he is in default. The developer would have 30 days after the notice to cure the default at no jeopardy. Agency Member Payne made a motion to begin the 125-day extension on January 16, and at the end of that 125 days, the requirements of the DDA resume at the date of 'this resumption and the "second 90-day period" in which the developer's $25,000 is at risk shall begin. If he cannot make the deadlines, then the Agency may notice him as being in default. The motion was carried by the following roll call vote: AYES: Childs, Christensen, Moore, Payne, Rockoff, Barton NOES: None ABSENT: Ratty NEW BUSINESS (a) Adoption of the Xelocation Guidelines Agency ]{ember Uayne made a motion to approve the Relocation Guidelines for the Redevelopment Agency. The motion was carried by the following roll call vote: AYES: Childs, Christensen, Moore, Payne, i~ockoff, Barton NOES: None ABSENT: Ratty [iD) Proposed Offer to Purchase Hall of Records City Attorney Oberholzer stated that hhe second paragraph of the Offer to Purchase will be changed to clarify to the County that there are two contingencies. Agency ~ember Moore made a motion to review and approve the Offer to Purchase for the Hall of Records. Agency f{ember Rockoff made a substitute motion to approve the Offer to Purchase which was carried bythe following r~ll call vote: AYES: Childs, Christensen, Moore, Payne, Rockoff: Bari_on NOES: None ABSENT: Ratty -4- ADJOURNMENT There being no further business to come before the Redevelopment Agency, Agency Member Christensen made a motion to adjourn the meehing at 6:50 p.m. ~. ~f~2~/~NBO~T~AM,~e/~re/~ary Baker ~f~,/e'ld ReQeve,~/~/~ Agency /~.'IES J.-~R~ON, Chairman Bakersfield Redevcxopment Agency .......... o0o .......... -5-